Can I remortgage even though I'm nearly 70?

A couple of older homeowners on the move come up against rigorous new lending rules. Money expert Annie Shaw offers a spot of guidance.

26/07/2016

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can i remortgage even though i'm nearly 70?

annie shaw

If is difficult to get a mortgage if the term ends after you retire

If is difficult to get a mortgage if the term ends after you retire

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A reader writes:

My husband and I plan to move from the south of England back to the north.

We have found a house, but it is something of a wreck and an architect said it could take six months or more to get it how we want it.

Our current house has a very small mortgage still outstanding, and we planned to increase this to raise cash to buy our new home.

We would remain in the remortgaged house while the building work is done on the new house, then redeem the mortgage in full when we sold up to move.

Difficulty finding lenders

However, we can’t find any lender to help us with this arrangement. Lenders seem to want to lend only for a minimum of two or three years - and only on a full repayment basis.

We could agree to this, but my husband is already 69 and they say the loan would need to end before he turns 70.

If we use only my income to support the loan, the lenders require my pension to support repayments in full. They won’t allow us to remortgage our old house for more than the sum we need for our new house, and use the balance to meet the loan payments.

It seems crazy that we can’t borrow £300,000 secured against a house worth £1.5 million, unless my pension alone covers the monthly repayments.

Annie Shaw replies:

You have been caught out by the brave new world of ‘responsible lending’.

After the Wild West era prior to the credit crunch, when lenders were handing out mortgages at 125% of the property’s value and lending to people who could not afford repayments, the financial regulator now requires that lenders take full responsibility for assessing affordability, under pain of penalty.

This has produced a tick-box mentality with most lenders, who want to cover their backs.

The easiest way to do this is to treat the regulator’s guidelines as rules and never deviate from them.

The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.